2012 -- S 2720

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LC01288

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO HUMAN SERVICES - MEDICAL ASSISTANCE - NURSING FACILITIES

RATE REFORM

     Introduced By: Senators Goodwin, Pichardo, and Ruggerio

     Date Introduced: March 06, 2012

     Referred To: Senate Health & Human Services

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 40-8-19 of the General Laws in Chapter 40-8 entitled "Medical

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Assistance" is hereby amended to read as follows:

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     40-8-19. Rates of payment to nursing facilities. -- (a) Rate reform.

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      (1) The rates to be paid by the state to nursing facilities licensed pursuant to chapter 17

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of title 23, and certified to participate in the Title XIX Medicaid program for services rendered to

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Medicaid-eligible residents, shall be reasonable and adequate to meet the costs which must be

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incurred by efficiently and economically operated facilities in accordance with 42 U.S.C. section

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1396a(a)(13). The department of human services shall promulgate or modify the principles of

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reimbursement for nursing facilities in effect as of July 1, 2011 to be consistent with the

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provisions of this section and Title XIX, 42 U.S.C. section 1396 et seq., of the Social Security

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Act.

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      (2) The department of human services shall review the current methodology for

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providing Medicaid payments to nursing facilities, including other long-term care services

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providers, and is authorized to modify the principles of reimbursement to replace the current cost

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based methodology rates with rates based on a price based methodology to be paid to all facilities

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with recognition of the acuity of patients and the relative Medicaid occupancy.

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      (3) By no later than January 1, 2012, under the direction of the Secretary of Health and

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Human Services, the Department of Human Services shall modify the principles of

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reimbursement to include the acuity needs of patients and the relative Medicaid occupancy as a

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factor in determining the reimbursement rates to nursing facilities.

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      (b) Phase I Implementation. - The department shall file a state plan amendment with the

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U.S. Department of Health and Human Services on or before November 1, 2011 to modify the

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principles of reimbursement for nursing facilities, to be effective on January 1, 2012, or as soon

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thereafter as is authorized by an approved state plan amendment, to establish price based payment

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rates for nursing facilities, recognizing patient acuity and Medicaid occupancy. to include the

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acuity needs of patients as a factor in determining the reimbursement rates to nursing facilities

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and to include the following elements:

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     (i) A direct labor cost center comprised of allowable direct care costs to be established by

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the department, subject to a ceiling of one hundred ten percent 110%, and adjusted for resident

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case-mix.

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     (ii) An indirect care rate comprised of a base per diem for all facilities equal to ninety

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three and forty-eight hundredths percent (93.48%) of statewide average.

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     (iii) Rearray of costs for all facilities in the direct labor cost center every three (3) years

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beginning in October, 2013.

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     (iv) Application of a fair rental value system to be developed by the department.

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     (v) Application of a pass through system to be developed by the department.

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     (vi) Adjustment of costs and ceiling maximums by the increase in a recognized national

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nursing home inflation index for the direct labor cost center and the indirect care rate for any year

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between array years; such adjustments to be applied on October 1st of each year beginning

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October 1, 2012.

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     (3) Implementation: The department shall file a state plan amendment with the United

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States department of health and human services on or before July 1, 2012 to modify the principles

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of reimbursement for nursing facilities, to be effective on January 1, 2013.

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     (4) The department is further directed to develop a methodology to incorporate into the

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reimbursement methodology an incentive payment component, and a component to reflect

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individuals with behavioral health needs, and report to the general assembly on the plan by

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December 31, 2012.

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     SECTION 2. This act shall take effect upon passage.

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LC01288

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO HUMAN SERVICES - MEDICAL ASSISTANCE - NURSING FACILITIES

RATE REFORM

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     This act would make various changes to the methodology of computing nursing facility

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reimbursement rates.

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     This act would take effect upon passage.

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LC01288

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